Personal loans are beneficial. It allows us to fill the gap of unnecessary expenses. We can use it for medical emergencies, weddings, education, and even for travel. Plus, its application process is hassle-free. We can immediately receive the cash within minutes/hours right after the submission of requirements.
However, loan myths are roaming around the corner. It causes apprehension among people to pursue the loan application.
If it’s your first time hearing about a personal loan, you probably listened to these, too! See below common personal loan myths that you should ignore.
Myth 1: Personal Loans are for Employees Only
There’s a common misconception that personal loans are only for salaried employees. This is because they have a steady income stream, and the loan company can easily monitor their credit history.
However, this is not true. Personal loans are for anyone with a regular and consistent flow of income. This include self-employed, professionals, and entrepreneurs.
The process is almost similar among these applicants, except that the loan company will check the Income Tax Return (ITR) for self-employed/ entrepreneurs. Then, they will also assess the credit history and other requirements, if needed.
Myth 2: A Good Credit Score is REQUIRED to Get Approved
A credit score is a numerical interpretation of an individual’s creditworthiness. It allows the loan company to assess how likely you will be paying back the loan on time. While a credit score is essential in a personal loan application, did you know that you can still apply if you have a low credit score?
Several factors can outweigh your low credit score. This includes your income and repayment capacity. If the lender sees that these two can fulfill your loan requirement, they will approve your application.
Myth 3: The Approval Process is Tedious and Time-Consuming
In today’s world, personal loans can be processed in as fast as minutes. You can apply online. You can upload your requirements online. The lender also reviews your application online and disburses the amount through online banking/ digital wallets.
In case of any concern, you can contact the lender anytime through customer support, email, or even on their social media accounts so that you can quickly fix it and proceed with the application.
Myth 4: Personal Loans are Intended for Personal Reasons
A personal loan is not restricted to personal expenses alone. You can also use it to start a business. You can invest the remainder in mutual funds or stocks. You can use it to purchase your cousin’s video camera, or maybe your dream phone or laptop?
Upon receiving the amount, it’s all yours. It’s your decision on where you will use the money.
Our only advice is to spend it wisely. Remember the main reason you have applied for the loan in the first place and have a repayment plan.
Myth 5: Personal Loans are Only Offered by Banks
Personal loans are not limited to banks. There are plenty of private lending companies you can trust if you plan to apply. This includes us, Par Pahiram, who offers short-term financial solutions to individuals and SMEs (Small Medium Enterprises). You can read more about us here.
If you are not familiar with the private companies, make sure to check it on the Securities and Exchange Commission (SEC). If they are listed on the SEC, they are authorized to operate in the Philippines legitimately.
Personal loan myths are already part of our lives. While we cannot avoid these, we can take charge of handling these. This means checking before believing and proceeding after validating.
If you want to apply for a personal loan, but you aren’t sure, contact the lending company, and they are the ones who’ll discuss it with you. Not your family, friend, or colleague. Go ahead and clear those unclear thoughts in your mind.